Hundreds of thousands will be affected by benefits changes

The Minister for Employment and Pensions has announced a series of plans designed to "fix the broken welfare system" and address the "perverse incentives" that drive people to rely on benefits. The announcement aims to cut spending on sickness and disability benefits, which have increased significantly in recent years and are projected to reach £70 billion per year by the end of this decade. These reforms are intended to ensure the welfare system is sustainable for future generations.

These measures are projected to reduce spending by more than £5 billion per year by 2029-30. However, strangely, we have not been given a detailed breakdown of which benefit policies will generate the cash savings. The government attributes the lack of specific figures to the need for the official independent forecasting body, the Office for Budget Responsibility (OBR), to review them ahead of next week's Spring Statement. This review will ensure the savings are realistic and achievable.

The OBR's assessment is crucial because there is some uncertainty about how much money will be saved, for example, there are currently huge incentives within the Personal Independence Payment (PIP) system for claiming the most severe disabilities. The government should already have a clear understanding of how many people are affected, and to what extent, regardless of the OBR's review. This understanding is essential for effective policy implementation.

These plans are more about making the budget numbers add up than about fundamental welfare reform. The fundamental issue is that from November next year, around a million claimants with various less severe problems will lose thousands of pounds. This reflects a view that spending on Pip benefits is "unsustainable" and puts the entire welfare system at risk. The government believes these changes are necessary to control costs.

While in Universal Credit savings, most of the impact comes from changes to future claimants, such as raising the qualifying age to 22 and halving health payments, this is not the case with Pip. Pip payments are determined based on a questionnaire about your daily life, such as your ability to prepare and eat food, wash and dress, or communicate and read. Each item is scored by a health professional on a scale from zero (no difficulty) to 12 (most severe). Your payment depends on the total score across all areas. The proposed change is that people will need to score at least 4 points in one item, indicating a more severe disability in one area. Currently, claimants can receive support by scoring lower points (1 and 2 points) across a wide range of activities, which may describe less severe difficulties. For example, needing an assistive tool or device to hear counts as 2 points, while needing support to express or understand complex verbal information counts as 4 points. Needing help washing hair or the body below the waist will be awarded 2 points, but needing help washing between the shoulders and waist will be awarded 4 points. The announced changes aim to disqualify these people from receiving Pip payments from November 2026.

The government knows how many people are affected, and who they are. For now, ahead of next week's Spring Statement, we can infer that approximately one million people will lose their full payment of £70 per week, or £3,500 per year. This is an advance payment on welfare reform and a larger, pre-assessable spending cut to help the Chancellor's numbers, thereby avoiding tax increases or exceeding her non-negotiable borrowing limits. The government hopes these changes will lead to a more sustainable and targeted welfare system.